Hawai'i's real-estate market trails Mainland

By Andrew Gomes
Advertiser Staff Writer

Despite a wave of investors buying property instead of stocks, Hawai'i largely missed out on the commercial real estate buying boom last year, according to a recent report.

Limited availability of ultra-high-value properties resulted in total sales volume last year of $868 million, down 40 percent from $1.44 billion of commercial property sold in 2001, according to an analysis by local real estate firm Colliers Monroe Friedlander.

The biggest change was in hotel sales that averaged $75 million. Just four sold last year for a collective $304 million, compared with 12 for $897 million in the previous year.

One significant increase occurred in retail/mixed-use property purchases, where the volume last year of $335 million was more than double $137 million in 2001. But that gain was offset by sales volume declines in land, office and other properties.

The decreases contrasted with increases in commercial property sales on the Mainland driven by investors shying away from falling stocks on Wall Street, Colliers said.

Mike Hamasu, research director for Colliers, said in the report that a lack of divestitures by Japan-based owners of Hawai'i property last year inhibited a more robust market here.

In 2001, Japan-based owners sold more than $700 million of hotel and office properties. Last year the biggest sellers were not from Japan.

The biggest transactions last year were the $250 million sale of Victoria Ward Ltd. by a local family company, the $155 million sale of 87 percent of Hilton Waikoloa Village by Taiwan-based Pan-Global Partners, and the $140 million sale of the Orchid At Mauna Lani hotel by Mainland firm Colony Capital LLC.

Among other commercial property sale highlights last year:

• Three golf courses sold for a combined $13 million, or $240,741 per hole.

• There were 14 office buildings that sold for a combined $36 million, equal to about $105 per square foot of office space.

• Apartment buildings were the most bought type of property with 21 transactions for a combined $85 million, or $65,877 per unit.

Colliers said the total number of transactions for at least $1 million was nearly the same in the last two years, with 71 last year and 72 the previous year.

This year so far, there is a slightly lower volume of inventory on the market, $642 million compared with $684 million at about the same time last year, according to Colliers.

Yet Hawai'i sellers should draw lots of interest from buyers outside the state because rates of return on Mainland properties have declined to where Hawai'i investments are more attractive to buyers who are still looking at real estate as an alternative to stocks.

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.